Reliance Industries on Friday announced the sale of 2.32 per cent stake in its digital unit to US-based Vista Equity Partners for Rs 11,367 crore, the third deal in a little over two weeks that will inject a combined Rs 60,596.37 crore in the oil-to-telecom conglomerate to help it pare debt.
The US-based private equity firm will buy a stake in Jio Platforms, which houses the country's youngest but biggest telecom firm Jio, at an equity value of Rs 4.91 crore and an enterprise value of Rs 5.16 crore.
"Vista's investment will translate into a 2.32 per cent equity stake on a fully diluted basis, making Vista the largest investor in Jio Platforms behind Reliance Industries and Facebook," the company said in a statement.
The deal follows Facebook picking up a 9.99 per cent stake in Jio Platforms on April 22 for Rs 43,574 crore. Within days of that deal, Silver Lake -- the world's largest tech investor -- bought a 1.15 per cent stake in Jio Platforms for Rs 5,665.75 crore.
"Jio Platforms has now raised Rs 60,596.37 crore from leading technology investors in less than three weeks," the company said.
Vista co-founder Brian Sheth is half-Indian and his father hails from Gujarat. Reliance owner and richest Indian Mukesh Ambani, who also comes from Gujarat, is said to have personal connections with the private equity firm's founder Robert Smith.
The discussions were led by Ambani's close aide Manoj Modi and Sheth.
Strategic and financial investors are to form 20 per cent of Jio Platforms. Between the three deals, Reliance has sold 13.46 per cent of Jio Platforms and more such investments are likely in near future.
Ambani, 63, chairman and managing director of Reliance, had in August last year set a target of March 2021 to make his conglomerate net debt-free. But thanks to the Facebook deal, a Rs 53,125 crore rights issue, Silver Lake and Vista Equity investments, and more stake sale to companies such as Saudi Aramco, the target is likely to be achieved by December.
At the end of the March quarter, Reliance had an outstanding debt of Rs 3,36,294 crore and cash in hand of Rs 1,75,259 crore. After adjusting cash, the net debt came to Rs 1,61,035 crore.
Of the outstanding debt, Rs 2,62,000 crore is on Reliance books and Rs 23,000 crore is with Jio.
As part of debt reduction plans, the company expects to complete a capital raising programme totalling Rs 1.04 lakh crore by June. This includes the rights offering of one share for every 15 shares held at Rs 1,257, a 14 per cent discount to the closing price for April 30.
Also included is the Rs 43,574 crore from the Facebook-Jio Platforms deal and Rs 7,000 crore from the sale of 49 per cent stake in fuel retailing venture to UK's BP plc.
Jio Platforms, a wholly-owned subsidiary of Reliance Industries Ltd, is a next-generation technology company. Reliance Jio Infocomm Ltd, with 388 million mobile subscribers, will continue to be a wholly-owned subsidiary of Jio Platforms.
Vista is a leading global investment firm focused on empowering and growing enterprise software, data, and technology-enabled companies that are reinventing industries and catalysing change. Vista has more than USD 57 billion in cumulative capital commitments and its global network of companies collectively represents the 5th largest enterprise software company in the world.
Commenting on the transaction with Vista, Ambani said Vista, one of the world's marquee tech investors globally, also shares the same vision of continuing to grow and transform the Indian digital ecosystem for the benefit of all Indians.
"In Robert and Brian, whose family hails from Gujarat, I found two outstanding global technology leaders who believe in India and the transformative potential of a Digital Indian Society," he said.
Commenting on the investment, Smith, founder, chairman and CEO of Vista, said, "We believe in the potential of the digital society that Jio is building for India. Mukesh's vision as a global pioneer, alongside Jio's world-class leadership team, have built a platform to scale and advance the data revolution it started.
"We are thrilled to join Jio Platforms to deliver exponential growth in connectivity across India, providing modern consumer, small business and enterprise software to fuel the future of one of the world's fastest-growing digital economies."
The transaction is subject to regulatory and other customary approvals.
Morgan Stanley acted as financial advisor to Reliance and AZB & Partners and Davis Polk & Wardwell acted as legal counsels. Kirkland & Ellis LLP and Shardul Amarchand Mangaldas & Co served as legal counsels to Vista.